Wednesday was another one of those sessions. It felt like a summer stroll through the local park with periodic stops to smell the flowers and take in the scenery. The rally has shifted into automatic pilot. While it’s not a rocket ship, the bias remains to the upside. Interestingly, the market was a lot stronger than the major indices would have one believe.

All investment sectors were higher except Utilities, as money has begun to rotate out of safety into opportunity.

S&P 500 Index

+0.30%

Communication Services (XLC)

+0.07%

Consumer Discretionary (XLY)

+0.67%

Consumer Staples (XLP)

+0.20%

Energy (XLE)

+1.25%

Financials (XLF)

+0.27%

Health Care (XLV)

+0.22%

Industrials (XLI)

+0.59%

Materials (XLB)

+0.13%

Real Estate (XLRE)

+0.67%

Technology (XLK)

+0.13%

Utilities (XLU)

-0.29%

Underpinning Firing on All Cylinders

I continue to point to session breadth measures as a way to gauge the strength of the market:

Face it. As a nation, we love spending money and we love free stuff, which makes this Valentine’s Day extra special because we just passed a major milestone this week.

$22,000,000,000,000 in debt and counting.

The U.S. debt continues to mount, but no one seems to care anymore except Bill Gates and Alan Greenspan. The latter, otherwise known as The Maestro, calls the $22.0 trillion debt level an “extreme imbalanced situation.” He rightly noted that “politically budget deficits don’t really matter, what matter is the consequences.”

At this point, I think the problem is that many Americans have become numb to the numbers after bracing for the economy to fall off a cliff for all those years of debt overdrive.

We never hit that cliff. While real-life prices are probably higher than measured through the Consumer Price Index (CPI) data, we aren’t near the inflation crisis that experts would have figured years ago if presented with our current circumstances. Moreover, at a time when the country is at the height of consumerism, materialism, and celebritism, everyone is spending to keep up with the Kardashians, even presidential candidates with proposals that don’t even have price tags.

There’s a part of me that wears rose-colored glasses that would like to believe there will be a moment when our lawmakers get a grip, but there’s another part of me that simply doesn’t see the political will.

There is a pox on both political houses for sure, but there’s also a pox on American voters that demand bridges to nowhere.

The last fiscal year’s interest on federal debt climbed above $500 billion – soon, it will be more than a trillion dollars annually.

Today’s Session

A Yeti (YETI), Canadian Goose (GOOS) and Zebra (ZBRA) reported earnings…and they all beat the street and raised guidance.

Meanwhile, the biggest winner this morning is Cisco (CSC)), which posted a very robust number and has already received a bunch of increased share price targets from several firms.

The biggest loser is Coke (KO), and management continues to point to a strong U.S. dollar as the greatest problem. A sharp decline in North America operating income suggests domestic issues as well.

Speaking of sluggish, the news of the morning is the monumental retail sales decline. The 1.2% drop is the largest since 2005, as every segment saw monthly declines except for motor vehicle sales and building materials.

The most shocking part of the report was the -3.9% plunge in Internet sales, which is the largest drop since November 2008. Unsparingly, department stores sales slumped down 3.3%.

Everyone is now scratching their heads over the report with initial guesses that the massive stock market decline and chatter of a recession conspired to keep consumers at bay and more guarded. The 1.7% decline in the so-called control group means fourth GDP will be lower.

Coming into the session, the Atlanta Fed and most economists were at 2.7% 4Q2018 GDP growth.

The initial reaction in the market was a drop from +70 to -80. This will be a great test of investors’ resolve. Will they sell based on this number that was shocking but probably an anomaly?